Sustainability Default Provisions 101

Photo by Gabrielle Henderson on Unsplash

Sustainability Default Provisions can be helpful in some circumstances to keep projects on track, and project team members working together towards shared climate goals. They are not appropriate in all instances, but we have integrated them into leases for very technical projects, where there are some performance-based unknowns.

Below is a summary of the issues and opportunities:

🪴 Most contracts contain some type of Default provision.  If a party breaches the contract, the other party is entitled to specific, often monetary, relief.  Default provisions make sense in a lot of contexts.

🪴 It may also make sense, for projects or relationships focused on sustainability or climate goals, to include a “Sustainability Default” provision.

🪴 This is certainly not appropriate in all instances, but can be given the collaborative nature of sustainability and climate work (see prior videos) and the increasing focus on performance metrics in sustainability and particularly sustainable buildings (performance metrics are measured over time, where parties are required to “prove” the performance of their project, product or process).

🪴 Examples of where a Sustainability Default provision may be helpful:
- Outlining and enforcing performance metrics that may change.  For example, energy budgets in a long-term lease, because the climate will change significantly during that time, requiring different building loads - how much will the climate change over say 20 years? We aren't entirely sure.
- Specific products that support sustainable or “healthy” building materials, acknowledging that technology will change and new products will come to market that may be appropriate (this is not exclusive to sustainability, but worth mentioning).

🪴 A Sustainability Default provision usually contains at least three parts:
1. Identification of events that “trigger” the clause (i.e. exceeding an energy or water budget during a specific period of time)
2. Delineation of the mini-mediation / dispute resolution process that will take place.  How will the parties get together, what will they do, how will any costs be shared, etc.
3. Usually one party will want there to be an “end” to this collaborative process if the issue just cannot be resolved, and more “traditional” default provisions are then triggered.

🪴 A Sustainability Default provision is not appropriate in all circumstances, but can be helpful for requirements that are a bit “squishy” for one reason or another and / or as the industry moves towards more performance-based standards; including my favorite and yours: Building Performance Standards!